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Preparation of Consolidation Worksheet Entries

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Added on  2019-11-20

Preparation of Consolidation Worksheet Entries

   Added on 2019-11-20

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Solution – 1 – Preparation of Consolidation Worksheet EntriesSTEP -1 – Preparation of Acquisition Analysis as on 1 July, 2013Fair value of Identified assets and LiabilitiesShare Capital100,000 Reserves5,000 Retained Earnings10,000 Assets at fair valuePlant (2000 x (1 - 30%))1,400 Land (5000 x (1 - 30%))3,500 Inventory (4000 x (1 - 30%))2,800 Databases (6000 x (1 - 30%))4,200 Liabilities at fair valueDamages payable (-10000 x (1 - 30%))(7,000)Recorded Goodwill(5,000)Net fair value of assets and liabilities114,900 Consideration transferred123,500 Less: Dividend receivable(6,000)Net Consideration paid117,500 Net Goodwill (117500 – 114900)2,600 Goodwill already recorded5,000 Unrecorded goodwill (2600-5000)(2,400)STEP -2 – Business Combination Valuation EntriesSr.No.ParticularsAmount (Dr.)Amount (Cr.)1Accumulated depreciation - Plant26,000 Plant24,000 Deferred tax liability600 Business Combination Valuation Reserve1,4002Depreciation expense200 Retained earnings (1/7/16)600 Accumulated depreciation (1/10 x $2 000 x 4)8003Deferred tax liability240 Income tax expense60 Retained earnings (1/7/16)1804Amortisation expense - databases1,500Retained earnings (1/7/16)3,150
Preparation of Consolidation Worksheet Entries_1
Transfer from Business Combination Valuation Reserve4,200 Income tax expense4505Transfer from Business Combination Valuation Reserve7,000Income tax expense3,000 Damages expense7,500 Gain2,5006Accumulated impairment losses - goodwill7,000Business Combination Valuation Reserve2,400 Goodwill9,400STEP -3 – Pre Acquisition Entry as at 1st July, 2013Sr.No.ParticularsAmount (Dr.)Amount (Cr.)1Retained earnings (1/7/13)10,000Share Capital100,000Reserves5,000Business Combination Valuation Reserve2,500 Shares in Sam Ltd.117,5002Dividend Payable6,000 Dividend Receivable6,000STEP -4 –Entry as at 30th June, 2017Sr.No.ParticularsAmount (Dr.)Amount (Cr.)1Retained earnings (1/7/16)19,300Share Capital100,000Reserves2,000 Business Combination Valuation Reserve3,800 Shares in Sam Ltd.117,5002Transfer from Reserves2,000 Reserves2,0003Business Combination Valuation Reserve7,000 Transfer from Business Combination Valuation Reserve7,0004Transfer from Business Combination Valuation Reserve4,200
Preparation of Consolidation Worksheet Entries_2

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